Musk’s SolarCity Raises $92 Million in Initial Share Sale

By Lee Spears -
Dec 13, 2012

SolarCity Corp. (SCTY), the solar power
provider led by billionaire Elon Musk, raised $92 million in its
initial public offering, 39 percent less than initially sought
after selling the shares at a reduced price.

The San Mateo, California-based company sold 11.5 million
shares, equivalent to a 16 percent stake, for $8 each, according
to a statement yesterday. SolarCity lowered the price before the
offering to $8 from an original range of $13 to $15 and
increased the number of shares offered from 10.1 million. The
IPO price gives the company a market value of about $585
million, about 4.7 times sales in the past 12 months, compared
with multiples of less than 1 for publicly traded peers.

Buyers in SolarCity’s IPO commanded a discount even as the
company is poised for growth after completing the most equipment
installations in California, the U.S.’s biggest solar-power
market. The offering contended with a market that has pummeled
public solar stocks and a pending U.S. government inquiry into
its accounting practices that may raise costs. The stock will
start trading today, listed on the Nasdaq Stock Market under the
symbol SCTY.

SolarCity, which booked a $95 million net loss in the 12
months through September, is one of a handful of companies that
lease solar panels to customers, install them on their property,
and charge them below-market rates for the electricity they
generate.

U.S. spending on energy-efficiency services will increase
more than four-fold between 2008 and 2020, reaching as much as
$80 billion, SolarCity said in regulatory filings, citing
Lawrence Berkeley National Laboratory.

Largest Market

In California, the largest U.S. market, SolarCity has
completed more installations than any other developer, according
to the California Solar Initiative, a state-run program that
tracks construction data. SolarCity says it has provided systems
for more than 45,000 buildings in 14 states. A competing top
developer, Sunrun Inc., says it has more than 20,000 customers
10 states.

Even as demand for alternative energy rises, solar-company
stocks have been hurt by oversupply of equipment and raw
materials. That has depressed the World Solar Energy Index of
company shares as much as 65 percent this year, extending the
drop from its 2007 peak to 96 percent.

While SolarCity currently benefits from tax credits
totaling as much as 30 percent of the cost of these systems, the
company’s accounting method for valuing the equipment has
recently come under scrutiny.

In July, SolarCity and competitors received subpoenas from
the U.S. Treasury Department for documents related to grants the
company received for building solar systems, filings show.
SolarCity said collecting the documents could take six months to
complete and that a decision from the department’s inspector
general may take as long as a year after that.

Goldman Sachs Group Inc., Credit Suisse Group AG and Bank
of America Corp. led SolarCity’s IPO.